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Oil prices fell around 3% in 2024, slipping for a 2nd straight year, as the post-pandemic demand recovery stalled, China's economy struggled, and the U.S. and other non-OPEC producers pumped more crude into a well-supplied global market.

Brent crude futures on Tue, the last trading day of the year, settled up 0.88%, to USD74.64 a barrel. U.S. WTI crude settled up 1.03%, to USD71.72 a barrel.

The Brent benchmark settled down around 3% from its final 2023 closing price of USD77.04, while WTI was roughly flat with last year's final settlement.

In Sep, Brent futures closed below USD70 a barrel for the first time since Dec 2021, and this year Brent broadly traded under highs seen in the past few years as the post-pandemic demand rebound and price shocks of Russia's 2022 invasion of Ukraine began to fade.

Oil will likely trade around USD70 a barrel in 2025 on weak Chinese demand and rising global supplies, offsetting OPEC+-led efforts to shore up the market, a Reuters monthly poll showed on Tue.

A weaker demand outlook in China in particular forced both OPEC and the International Energy Agency (IEA) to cut their oil demand growth expectations for 2024 and 2025.

It is a misconception that China oil demand is weak because of the soft economy. It is China's green push into EVs, solar energy, wind power, etc that is slowing demand.

China's oil demand is projected to peak at 770 million tons in 2025.

The IEA sees the oil market entering 2025 in surplus, even after OPEC and its allies delayed their plan to start raising output until Apr 2025 against a backdrop of falling prices.

U.S. oil production rose 259,000 bpd to a record high of 13.46 million bpd in Oct, as demand surged to the strongest levels since the pandemic, data from the U.S. Energy Information Administration (EIA) showed on Tue.

Output is set to rise to a new record of 13.52 million bpd next year, the EIA said.

Investors will be watching the Federal Reserve's interest rate-cut outlook for 2025 after Fed bank policymakers this month projected a slower path due to stubbornly high inflation.

Lower interest rates generally spur economic growth, which feeds energy demand.

Some analysts still believe supply could tighten next year depending on President-elect Donald Trump's policies, including those on sanctions. He has called for an immediate ceasefire in the Russia-Ukraine war, and he could re-impose a so-called maximum pressure policy toward Iran, which could have major implications for oil markets.

"With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year," said Phil Flynn, a senior analyst for Price Futures Group, also citing firming Indian demand and recent stronger Chinese manufacturing data.

China's manufacturing activity expanded for a third-straight month in December, though at a slower pace, suggesting a blitz of fresh stimulus is helping to support the world's second-largest economy.

Buoying prices on Tuesday, the U.S. military said it carried out strikes against Houthi targets in Sanaa and coastal locations in Yemen on Mon and Tue.

The Iran-backed militant group has been attacking commercial shipping in the Red Sea for more than a year in solidarity with Palestinians amid Israel's year-long war in Gaza, threatening global oil flows.

Meanwhile, U.S. crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.

Crude stocks fell by 1.4 million barrels in the week ended Dec. 27, the sources said on condition of anonymity. Gasoline inventories rose by 2.2 million barrels, and distillate stocks climbed by 5.7 million barrels, they said.